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LATEST NEWS

Tuesday, March 17th, 2020

Willie Walsh postpones retirement to help deal with fallout from COVID-19

Willie Walsh has confirmed that, for the foreseeable future, he will remain at the helm of IAG as its Group chief executive, while his successor-in-waiting, Luis Gallego, will remain in charge as CEO at Iberia. IAG, headquartered at London Heathrow, comprises a number of subsidiary airlines,including Aer Lingus and Aer Lingus Regional, British Airways, Iberia and Iberia Express, LEVEL, and Vueling.

Antonio Vázquez, IAG´s chairman, said: "As we respond to COVID-19, Willie, Luis and the board of IAG have decided that management stability across the group should be a priority in the near term. We are grateful that Willie has agreed to delay his retirement for a short period at this challenging time."

IAG has already canceled all flights to and from China and Italy, while also reducing capacity on Asian routes. Forecasts for the January-to-March quarter estimate a 7.9% drop in capacity, while for April and May the Group is projecting capacity in terms of available seat kilometres (asks) to fall by up to 75% of that for the same period in 2019. continue reading

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Air Canada withdraws 2020 and 2021 guidance

Air Canada, along with the rest of the global airline industry, is facing a severe drop in traffic and a corresponding decline in revenue as a result of the coronavirus (COVID-19) outbreak and travel restrictions imposed in many countries around the world, including Canada and the United States. Although the company expects this disruption to be temporary, as the full impact and duration of the outbreak is unknown, Air Canada is withdrawing its previously announced first quarter and full year 2020 guidance as well as its full year 2021 guidance (including its free cash flow guidance for the 2019-2021 period) while it takes steps to mitigate the financial impact on its business.

For the second quarter of 2020, Air Canada expects, on average, system ASM capacity to decline by approximately 50% versus the comparable period in 2019, reflecting capacity reductions in all key markets affected by COVID-19 or by travel restrictions. The reduction in capacity in Pacific markets for the month of April is expected to be approximately 75%. The company will continue to proactively adjust capacity as required.

A combination of significantly lower jet fuel prices, the projected cost savings associated with capacity reductions, including workplace reductions and other programs, and a general cost reduction program is expected to mitigate between 50 and 60% of the company's total revenue loss for the second quarter of 2020. Air Canada believes that, excluding fuel and depreciation and amortization expenses, approximately 50% of its operating expenses are variable in nature. Air Canada has no current outstanding fuel hedge positions.

To preserve cash, Air Canada is initiating a company-wide cost reduction and capital deferral program, targeting at least CA$500 million.

Air Canada suspended its share repurchase program effective March 2, 2020 and drew down its US$600 million revolving credit facility. In addition, Air Canada is working with several parties to raise additional liquidity over the next several weeks, which will require pro-rata security from its unencumbered asset pool.

Air Canada assumes that the Canadian dollar will trade, on average, at C$1.39 per U.S. dollar for both the second quarter and the remainder of 2020 and that the price of jet fuel will average 47 CAD cents per litre for the second quarter of 2020 and 50 CAD cents per litre for the remainder of 2020.

Air Canada had cash, cash equivalents, short and long investments of CA$7.1 billion at March 13, 2020, which includes the proceeds from the draw-down of the U.S.-based revolving credit facility discussed above. In addition, it has a Canadian CA$200 million revolving credit facility which it intends to draw down in the next week.

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Textron Aviation Defense receives U.S. Air Force contract for two Beechcraft AT-6 Wolverine aircraft

Textron Aviation Defense has finalized a US$70.2 million Other Transaction Authority (OTA) contract with the U.S. Air Force Life Cycle Management Center, to equip the U.S. Air Force with two Beechcraft AT-6 Wolverine aircraft, pilot training, engineering services and up to four years of contractor support for maintenance and spares.

The work in support of this OTA, which includes activities in support of military type certification, will take place in Wichita, Kansas.

Lockheed Martin elects James D. Taiclet as President and CEO

The Board of Directors of Lockheed Martin has elected James D. Taiclet as president and CEO, effective June 15.

Taiclet will continue to serve as a member of the corporation's board, which he joined in 2018. He has served as chairman, president and CEO of American Tower Corporation since 2004 and CEO since 2003. During that time, American Tower grew significantly and increased its market capitalization from approximately US$2 billion to approximately US$100 billion.

Taiclet will succeed Marillyn A. Hewson, who has served as chairman, president and CEO since 2014 and president and CEO since 2013. Hewson will become executive chairman of the board, also effective June 15, subject to her re-election to the board by the stockholders at the upcoming annual meeting. 

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BOC Aviation signs purchase-and-leaseback agreement with Cathay Pacific

BOC Aviation has signed a purchase-and-leaseback agreement with Cathay Pacific Airways (Cathay) for six Boeing 777-300ER aircraft. All six aircraft will be placed on long-term leases with the carrier.

BOC Aviation is a leading global aircraft operating leasing company with a fleet of 523 aircraft owned, managed and on order. Its owned and managed fleet was leased to 93 airlines worldwide in 41 countries and regions as of December 31, 2019.

TUI temporarily suspends vast majority of all travel operations, applies for state aid

TUI Group has decided, in line with government guidelines, to suspend the vast majority of all travel operations until further notice. This temporary suspension is aimed at contributing to global governmental efforts to mitigate the effects of the spread of the COVID-19.

In light of this situation, the Executive Board has decided to withdraw the Financial Year 2020 guidance as communicated on February 11, 2020. Furthermore the Executive Board also refrains from issuing a new guidance for the Financial Year 2020 under the current circumstances.

The Group has cash and available facilities of approx. €1.4 billion and year-to-date performance had been in-line with expectations prior to COVID-19. The company said that it is taking substantial cost measures to mitigate the earnings effect and moreover has decided to apply for state aid guarantees to support the business until normal operations are resumed.

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Ryanair to ground most of its fleet

The Irish low-cost airline Ryanair has announced that it will ground almost all of its aircraft in Europe for the next seven to ten days.

Over the past week, the spread of the Covid-19 virus and associated Government travel restrictions have had a significant and negative impact on the schedules of all Ryanair Group Airlines.

Over the past 7 days, Italy, Malta, Hungary, Czech Republic, Slovakia, Austria, Greece, Morocco, Spain, Portugal, Denmark, Poland, Norway and Cyprus have imposed flight bans of varying degrees, from all flights to/from the country, or banned flights to/from countries with high risk of Covid infection. Over the weekend for example, Poland and Norway have banned all international flights, while in other countries (without travel bans) there has been severe reduction of ATC and essential airport services.

Ryanair expects the result of these restrictions will be the grounding of the majority of its aircraft fleet across Europe over the next 7 to 10 days. In those countries where the fleet is not grounded, social distancing restrictions may make flying to all intents and purposes, impractical, if not, impossible.

For April and May, Ryanair now expects to reduce its seat capacity by up to 80%, and a full grounding of the fleet cannot be ruled out. Ryanair is taking immediate action to reduce operating expenses, and improve cash flows. This will involve grounding surplus aircraft, deferring all capex and share buybacks, freezing recruitment and discretionary spending, and implementing a series of
voluntary leave options, temporarily suspending employment contracts, and significant reductions to working hours and payments. We are working with our people and our unions across all EU countries to address this extraordinary and unprecedented Covid-19 event, the impact and duration
of which is, at this time, impossible to determine.

The Ryanair Group has strong liquidity, with strong cash and cash equivalents of over €4 billion as at March 12. Its focus is on completing as much of the scheduled flying program as is permitted by National Governments over the next 7 days, so that it can repatriate customers, where possible, even as flight bans are imposed and ATC and essential airport services are reduced.

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oneworld, SkyTeam and Star Alliance member airlines call on governments and stakeholders for extraordinary support

On behalf of their member airlines, the three global airline alliances oneworld®, SkyTeam and Star Alliance are jointly calling on governments and stakeholders to take action to alleviate the unprecedented challenges faced by the global airline industry amid the COVID-19 pandemic.

The three global alliances, which represent almost 60 airlines around the world that contribute
more than half of global airline capacity, are strongly supporting a request by the International Air Transport Association for regulators to suspend slot usage rules for the northern summer 2020 season as the airline industry suffers from extraordinary reductions in passenger demand.

The alliances welcome the moves in recent days by some regulators who have suspended slot regulations temporarily and urge others to follow suit promptly. They also request that regulators consider extending the suspensions for the entire operating season.

The impact of COVID-19 on the airline industry is significant, with IATA estimating up to US$113 billion in revenue losses for global passenger airlines. The impact is expected to have a ripple effect through the value chain that supports the airline industry. The forecasted revenue loss scenario does not include travel restrictions recently imposed by the US and other governments. U.S. restrictions on passengers from the Schengen Area will place pressure on the US-Schengen market, valued at over US$20 billion in 2019.

To alleviate the immense pressures faced by airlines in the current operating environment, and in support of IATA’s statement on 12 March, the three alliances urge governments worldwide to prepare for the broad economic effects from actions taken by states to contain the spread of COVID-19, and to evaluate all possible means to assist the airline industry during this unprecedented period.

The alliances also call on other stakeholders to provide support. For example, airport operators are urged to evaluate landing charges and fees to mitigate the financial pressure faced by airlines due to a severe decline in passenger demand.

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